Relief precludes recovery

December 28, 2012 | Cities, Disasters, New Orleans, Redevelopment, relief, Slums, US News

By:David A. Smith

 

Relief is a noble endeavor.  Recovery is a slow and difficult process.  So at any given moment, relief seems the kinder thing to do – and yet, by its well-intended support, relief precludes recovery and in that preclusion extends the economic depression.  That’s my takeaway, anyhow, from this AP story reprinted in Yahoo News (July, 2012):

 

In this May 10, 2012 photo, a blighted home, which is managed by the Louisiana Land Trust, an agency set up to handle the wrecked properties using federal funds, is seen on Dumaine St. in New Orleans.

 

New Orleans (AP) — More than 3,000 lots flooded by Hurricane Katrina and bought with federal money in an emergency bailout sit idle across this city — a multimillion-dollar drain on federal, state and city coffers that lends itself to no easy solution.

 

Built and vacant property is a haven for rot, particularly in a hot humid climate like New Orleans’, and even more when economic gangrene has set in.

 

An Associated Press examination of the properties sold to the government by homeowners abandoning New Orleans after the catastrophic 2005 flood has found that about $86 million has been spent on 5,100 abandoned parcels.

 

The Federal government has thus spent about $17,000 a property in pure maintenance costs after having bought the properties.  That money has been spent solely for relief, a holding action with no rebuilding or redevelopment.

 

And there’s no end in sight to maintenance costs for perhaps most of the 3,100 properties that remain unsold.

 

Where is the city government?

 

This portfolio of urban wasteland and blight represents part of the storm’s difficult legacy that persists nearly seven years later.

 

New New Orleans needs to shrink, in a rational manner.  Like Detroit and Cleveland, about which I’ve previously posted, from the moment Katrina hit, New New Orleans was destined to be much smaller than Old New Orleans. 

 

To find any of these posts, Google “AHI <post name>” and it should pop up

 

Its city government at the time, led by demagogic incompetent mayor Ray Nagin (now, thankfully, disgraced), refused to acknowledge that necessity, and now New New Orleans is burdened with hundreds and hundreds of properties that have negative value.

 

Until now, the [repurchased] properties have been managed by the Louisiana Land Trust, an agency set up using federal funds.



Why are these homes still here?

 

I wonder if the Federal government’s willingness to pay for their maintenance in stasis has made it too many for the City of New Orleans, and the LLT, to do nothing, clinging to the hope of reviving buyers to come, rather than accepting reality.

 

In this May 10, 2012 photo, a blighted home, which is managed by the Louisiana Land Trust, an agency set up to handle the wrecked properties using federal funds, is seen on Dumaine St. in New Orleans.

 

And with federal funding for maintenance running out, there’s concern the lots could fall into deeper neglect when this cash-strapped city is forced to pay for upkeep and that they could contribute to New Orleans’s staggering blight.

 

While in other contexts we’ve seen the definition of blight stretched beyond all recognition, in this case the word is all too accurate.

 

At last count the city found an estimated 43,000 blighted properties, according to a city-sponsored analysis of US Postal Service data.

 

[Observe the importance of postal records in counting and enumerating. – Ed.]

 

“Right now nobody on those 3,000-plus properties is contributing. It’s costing the city and state government to maintain them. Police got to go out there, run kids out of there, drug-users,” said Erroll Williams, the tax assessor in New Orleans. “That’s a cost to the city. If they sell one, it comes back on the tax rolls, I’m happy.”

 

Seeking to put property tax onto the tax rolls: Williams

 

Mr. Williams is absolutely right.  Most of these properties need to be torn down, and  in fact, some have been, but not enough of them. 

 

Jeffrey J. Thomas, a land-use lawyer on former Mayor Ray Nagin’s rebuilding team, said the city needs to be creative. “Maybe they should make them into ponds to store water.  Make them into parks or community gardens,” he said.

 

Clearly neither Mr. Thomas nor the journalist has ever heard of malaria.

 

Looks like an anopheles-protected wetland to me!

 

Right now, the LLT is in a holding pattern, spending money with no positive action plan, and no exit strategy in sight.

 

Just circle around, wasting money and getting nowhere

 

Every month, LLT spends about $88 to cut the grass at each location. Other expenses range from insurance to pest control.

 

Since 2007, when the first homes were bought, $34 million has been spent on maintenance, $4.5 million on security and $9.1 million on overhead costs in New Orleans, according to LLT. In addition, some $38 million has been spent on demolishing 3,607 homes beyond repair and tearing up 1,256 slabs.

 

Demolishing a home costs money.  Then, in New New Orleans where supply exceeds demand, the resulting green space will have minimal value.  The sites today have negative value.

 

In this May 10, 2012 photo, Raynetta Hammler walks on an empty lot, which is managed by the Louisiana Land Trust, across the street from her home in New Orleans.

 

Perhaps that too is a reason the LLT isn’t moving faster – direct action is both costly and committal.  Perhaps it’s administratively safer to wait another week, or month, or year.

 

When in doubt, doubt

 

Meanwhile, the blighted properties are hurting their neighborhoods’ value, acting as a drag sail on the New New Orleans real estate market.

 

Visits by a reporter to neighborhoods hit the hardest by the flood found these orphaned lots are contributing to blight and the checkerboard-like rebuilding still dragging on in parts of the city.

 

The tour of 45 government-owned properties was focused on the Lower 9th Ward and other neighborhoods where these abandoned lots are concentrated.  Overall, many unsold properties are in low-lying neighborhoods that suffered blight and poverty even before Katrina.

 

Yes, those neighborhoods were troubled if not blighted, and with Katrina, they were doomed, as many people predicted.

 

Keep predicting often enough, maybe you’ll be right once

 

But they weren’t confined to rundown neighborhoods. On South Galvez Street in Broadmoor, an abandoned house was the only sign of Katrina left on the block.

 

Jim Provensal, a musician living next door, said he wanted to buy it, but the city agency in charge of selling or developing the properties, the New Orleans Redevelopment Authority, wanted $130,000.

 

Sounds like these properties have the curse of too much cost?

 

“That’s too much money!” Provensal said. “They don’t care. They know if they sell the property they won’t have a job.”

 

And so, the boarded-up house sits, paint peeling.

 

In the Lower 9th Ward, 739 homeowners sold to the state. About 570 of those properties remain unsold and entire blocks sit undeveloped.

 

“The city ain’t done a thing,” a frustrated Carolyn J. Claiborne said on a recent day, scanning empty lots on her Lower 9th Ward street. She complained of snakes and vermin.

 

That’s the least of her problems.

 

In this May 10, 2012 photo, homeowner Jim Provensal stand between his home, left, and a blighted home next door, which is managed by the Louisiana Land Trust, an agency set up to handle the wrecked properties using federal funds, in New Orleans.

 

The New Orleans Redevelopment Authority has said it’s sitting on many properties at the request of neighborhood groups to avoid flooding the market and hurting home prices.

 

Perhaps so, but the market’s failure to clear isn’t actually creating price support.  The unsold property is further clouding the market. 

 

The agency says it’s drafting plans to dispose of the properties and that it has about 750 prospective buyers. It plans to hold onto many of the other properties for the foreseeable future, NORA said.

 

Where is the city government? 

 

Is anybody at home in there?

 

Nicole Heyman, a New Orleans-based expert on vacant and blighted property with the nonprofit Center for Community Progress, said holding onto the property is the right choice. She is advising the city on its plans.

 

When a city sells cheaply they end up “just putting properties in the hands of investors who drive the properties’ values down,” she said.  Buyers often sit on vacant properties hoping for a market turnaround, and when that doesn’t happen the properties end back up in the hands of a city, she said.

 

I disagree with Ms. Heyman: the holding cost of a sold property would be borne by the buyer, the property’s unlikely to be more blighted in the future, and if the buyer did nothing, the city could cite it, place a tax lien on it, and take it back for delinquencies. 

 

This summer the city has begun taking ownership of the 3,100 properties as federal funding runs out. Soon the city is expected to be in charge of cutting the grass and maintaining them.

Stacy Head, a City Council member-at-large, said the city doesn’t have the resources.

 

“You’re not going to get 18-feet-high grass on these LLT properties but it’s not going to look like a putting green. We have budget realities we have to deal with,” he said.

 

Sad to relate, it would be better if the bottom quartile of these homes went somewhere to die.

 

Hebert said NORA expects to pay contractors about $20 per house on grass cutting and to spend about $3 million a year overall to maintain the properties.

 

Head, who oversees housing issues for the City Council, expected about 1,500 to go unsold  because of a lack of demand.

 

Donald Vallee, a longtime New Orleans developer, complained that city officials had not acted fast enough.

 

“How many years does it take them to do something?” said Vallee, who also sits on the Louisiana Land Trust board.

 

As many years as the Federal government keeps giving them free money.

 

Lesko get some free money

 

He advocated selling the lots at auction. Sitting on the properties, he said, was a “pure waste of money.”

 

Good idea.

 

Many, including Head, want to see vacant lots turned into urban green spaces.

 

Probably the best idea. 

 

In this May 10, 2012 photo, Raynetta Hammler stands on an empty lot, which is managed by the Louisiana Land Trust, across the street from her home in New Orleans.

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